Studio Hiring Pacts Spark New Class Action Lawsuit

This isn't the first lawsuit over anti-poaching agreements in the entertainment industry
George Lucas

Testing the maxim that once is never enough, Robert Nitsch Jr, a former visual effects worker at DreamWorks Animation, has became the latest to go to court over an alleged conspiracy to deny workers in the visual effects community better work opportunities. On behalf of himself and others similarly situated, he's targeting DreamWorks, Disney's Pixar and Lucasfilm units, Sony Pictures and others.

The lawsuit figures to face hurdles, but let's start with what Nitsch and his attorneys at Cohen Milstein have going for them.

In September 2010, the U.S. Justice Department filed a similar lawsuit against Pixar and Lucasfilm, as well as companies in the tech sector like Apple, Google, Adobe and Intuit, over anti-poaching agreements. The DOJ's action ended after the companies agreed to a prohibition against enforcing those agreements for a period of five years.

Then came a class action lawsuit in 2011. Thus far, it has largely been going the plaintiffs' way. Pixar and Lucasfilm settled for $9 million. The other defendants failed last month to get the judge to sign off on a $325 million settlement because it wasn't enough. U.S. District Judge Lucy Koh has seemingly accepted that a conspiracy took place and cited "substantial and compelling" evidence like an email from George Lucas, stating, "We cannot get into a bidding war with other companies because we don't have the margin for that sort of thing."

Nitsch's lawsuit follows the progress gained there.

"The conspiracy deprived Plaintiff and other class members of millions of dollars which Defendants instead put to their bottom lines," the complaint says. "It did so at the same time that the films produced by these workers achieved world renown and generated billions of dollars in revenues in the United States and abroad."

Now, let's turn to the potential shortcomings.

Pixar and Lucasfilm made their settlement last September with the intention of resolving their legal difficulties on this front. When Judge Koh signed off on the deal, class members were told they had to explicitly opt-out or be legally bound into releasing claims. Nitsch's lawsuit admits that his proposed class excludes the prior class and is rather vague on how the latest claims against Pixar and Lucasfilm represent something new. Nevertheless, the lawsuit asserts that the proposed class contains thousands of members.

Much of the latest lawsuit pertains to actions by executives at Pixar and Lucasfilm, but the complaint names Dreamworks, Sony, Disney, Digital Domain and ImageMovers as defendants too. Is the complaint pled with sufficient specific facts to support claims against these defendants?

Take Sony Pictures.

Just two paragraphs are devoted to Sony. The first asserts that Sony formed non-solicitation agreements with Pixar, Walt Disney Animation Studios and Digital Domain. The second states that in 2004 or 2005, Pixar president Ed Catmull met in person with senior executives at Sony Animation "to reach some agreement" because his own employees were becoming "really desirable" and he needed "to nip this in the bud." According to the complaint, Catmull was able to reach a "gentleman's agreement" with Sony.

These allegations seem like they are lifted from evidence produced in the prior class action, so we'll note what's left out.

For example, before Catmull writes Steve Jobs, "We need to nip this in the bud," he states, "Sony has approached all of our producers trying to hire them... We don’t have a no raid arrangement with Sony."

And as for the supposed "gentleman's agreement," Catmull was asked about this during his deposition. Yes, he used that phrase, but then, this...  

QUESTION: Was that an agreement [with Sony] not to initiate contact with each other’s employees without prior indication of interest on the part of the employee being contacted?

CATMULL: Well, I don’t recall the details of what we said, but I do – I think the general principle was that the act of systematically going after everybody was just bad for everybody. So I – I walked away believing that they would not do that anymore. I was wrong."  

Will Nitsch's lawyers get an opportunity to investigate further? They will only be able to do so if they hurdle past the initial objections to the lawsuit. Those might include a challenge that this lawsuit was filed too late. In most antitrust lawsuits, the statute of limitations is four years.

And what happened exactly four years ago next week?

As Nitsch's lawsuit puts it, "Plaintiff and members of the Class did not discover, and could not have discovered through the exercise of reasonable diligence, the existence of any conspiracy until at the earliest September 17, 2010 when it was first revealed that an investigation by the DOJ into non-solicitation agreements among high-tech companies included Pixar, a visual effects and animation company."

Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner

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